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Corn futures, which popped to record highs last summer amid the severe U.S. drought, proceeded gradually to cool as the high prices choked off demand. Combine that trend with the potential for a record U.S. crop this year—and corn prices are likely to keep falling over the next few months.

"Everything is ugly in our opinion right now" in the corn market, says Rich Nelson, director of research at broker and advisory firm Allendale.

U.S. corn supplies remain tight after the drought widely damaged crops last year, but that is being countered by weak demand. The ethanol industry, which consumes about 40% of the U.S. corn crop, has cut production owing to poor profit margins. Weekly U.S. ethanol output in late January fell to the lowest level since record-keeping began in mid-2010.

The overseas appetite for the grain also remains soft. The Agriculture Department this month cut by 5% its forecast for U.S. corn exports in the year that ends Aug. 31.

"Everyone can talk about how tight the corn stocks are, but if we don't need it, then it really doesn't matter," says Chad Henderson, president of brokerage Prime Ag Consultants in Brookfield, Wis.

MEANWHILE, A HUGE U.S. harvest this year will more than replenish corn stockpiles. The U.S. will produce a record 14.44 billion bushels of corn this year, the Agriculture Department predicted last week in its first forecast for the next crop. That would be up 34% from production of 10.78 billion bushels last year.

Such a large harvest will require favorable weather, of course. But there is reason for optimism. Rain and snowfall in the past few months have eased dryness in the Corn Belt. About 48% of the Midwest is currently experiencing drought, down from 63% at the beginning of September, when the last corn harvest began, according to the U.S. Drought Monitor. The survey also shows the severity of the drought has declined. More severe levels of drought now cover just 24% of the Midwest, down from 45% in early September.

Henderson predicts December corn futures at the Chicago Board of Trade could fall to $4 a bushel by late summer, when the next corn harvest begins, if weather conditions are normal. December corn on Friday closed at $5.63 a bushel, nearly flat on the week.

Even if the next crop's yield per acre is moderately lower than the level predicted by Agriculture Department, "we're still going to have a near-record corn crop," Henderson says.

Allendale's Nelson similarly expects December corn futures to slump to less than $4.50 a bushel in October. He cites the prospect of a large new crop and corn demand—from foreign buyers, ethanol producers, and the livestock farmers who use corn in animal feed—that is even weaker than what's currently forecast by the Agriculture Department.

Corn prices are usually volatile over the summer, as jittery traders respond to constantly changing weather forecasts. But after the bumpy ride, futures tend to bottom out during the harvest, which occurs from September to November, when supplies are most ample.

That would be a good time to exit any bet on lower prices.

OWEN FLETCHER covers commodities and other topics for The Wall Street Journal.